A member has written in to What could possibly go wrong? with a story about changes to the terms of their engagement midway through the project:
Dear What could possibly,
My client has just told me that they won’t be continuing with me for their project. I have been able to get a planning permit for them after protracted and detailed negotiations with the local council who have finally agreed to issue a planning permit. Now the client says that they are going to a designer / drafting service to complete the construction / permit drawings. They say that they will be able to get it done cheaper than the fees that we had agreed, especially now that all the hard work has been done.
Dear Member,
You’re quite rightly very disheartened to be treated like this and probably wondering if you should trust any future client. The answer to this is that you should always trust your client. All business agreements are based on trust. In simple terms the client trusts you to do a good job and you trust the client to pay you, that’s just the way our system works. However, to make sure there are no misunderstandings about the scope and extent of services as well as your fees it is necessary to have a good client / architect agreement where you set the terms of your engagement.
If you are acting for your client in a residential project you are required to have an agreement. If you participate in the ArchiTeam group professional indemnity insurance policy it is a condition that you have agreed with to have a formal written agreement.
So what should the agreement contain to deal with this type of client who may have always being going to take advantage of your expertise and then just take advantage of you?
As always, I check around on these things and found an agreement that says –
The agreement shall be for the duration of the services as outlined herein with no provision for early termination. Should there be a change in the scope or extent of services the full fee is due and payable.
This should flush out any prospective client looking to cut and run.
I also checked with my old practitioner mate who has been around the place for a while to see what he usually does. He said that he is aware of this type of approach from clients which he thinks is becoming more prevalent. His agreement contains a penalty for an early opt out.
The full clause in the agreement is:
Additional fees are chargeable when an additional type of service is provided as well as when there is a change of client instruction. Should the architect be required to carry out work beyond the extent of agreed services then this will be charged at the current hourly rate. If the agreed extent of services is to be reduced by the client, then fees, as calculated by the architect, shall be payable to the date of notification plus a cancellation fee of 10% of the total fee.
The architect tells me that this clause has never been challenged or requested to be altered. He says that if it is he is prepared to respond by saying that the architect has taken on the project and as such has not sought other work as well as factoring it into staffing requirements. Maybe it hasn’t been questioned because clients see it as a reasonable part of the agreement. The architect also said that he would walk away if the client didn’t agree with it because it is also a test to see if they are genuine and can be trusted.
Please note that this column is a discussion in general terms only and not intended as specific advice, you must always get this from the appropriately qualified people.
Peter Finn
Disclaimer – ‘What could possibly go wrong?’ is not an advice column, it is only general comment from ArchiTeam who are not aware of your circumstances with any issue that you may have. You cannot rely on these general comments, each member must make their own decisions about any action they should take and seek independent advice of their own if they are unsure.